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Text of Severed Letter

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: CTF 2011 question 5: Does a taxable employment benefit arise where employers reimburse employees for the cost of computer equipment chosen and purchased by the employees that is used in the performance of their employment duties?

Position: Question of fact, taking into account all the facts and circumstances.

Reasons: Under paragraph 6(1)(a), the value of benefits of any kind received or enjoyed by an employee are included in employment income.

Increasingly, employers are considering implementing "bring-your-own-device" programs for their employees. Under these programs, the employee is provided with a fixed amount to purchase his or her computer equipment and is reimbursed for the lesser of a stipulated maximum amount and the amount actually paid for equipment. The reason that companies are moving towards such programs is to provide their employees with choices of the type of computer equipment that they use in the performance of their employment duties and to reduce the employers' cost of supporting hardware.

a) Could the CRA confirm that a program such as the one described, would not result in an employment benefit to the employee? There were rulings that were given in the early part of the past decade with respect to supplying computers to employees.
b) Can the CRA confirm that the principles outlined in these rulings apply to a bring-your-own-device program? See in this regard ruling 2000005356 issued on December 14, 2000. See also rulings 2000003723 and 2000002810.

CRA Response

(a) Paragraph 6(1)(a) of the Income Tax Act includes in an employee's income the value of any economic benefit received or enjoyed in respect of his or her employment. Whether or not an employee receives an economic benefit is a question of fact, and can only be determined after taking into account all of the facts and circumstances.

It is our general view that an employee will be considered to have received an economic benefit when the employee is reimbursed, in whole or in part, for the purchase of an asset, including a computer, of which the employee retains ownership, notwithstanding that the particular asset is used for employment-related purposes. The employee is considered to have received an economic benefit from the employer, as the employee's net purchase cost of the computer owned by the employee is less than it would otherwise have been. The amount of the economic benefit would be equal to the reimbursement received by the employee.

However, if ownership of the computer is transferred to the employer upon reimbursement, then it is our view that where the computer is used for employment-related purposes, with only incidental personal use by the employee, an economic benefit would not be considered to arise.

(b) In Income Tax Technical News No. 22, dated January 11, 2002, and Document 2002-0173335, we clarified our position in respect to these earlier rulings. These earlier rulings were predicated on the fact that the computers were used for employee computer literacy training that primarily benefitted the employer, and fell within the guidelines in Income Tax Technical News No. 13 (archived).

Mary Allan
2011-042580

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CRA was asked to comment on "bring-your-own-device" programs for employees, under which the employee is provided with a fixed amount to purchase his or her computer equipment and is reimbursed for the lesser of a stipulated maximum amount and the amount actually paid for equipment. CRA stated:

The employee is considered to have received an economic benefit from the employer, as the employee's net purchase cost of the computer owned by the employee is less than it would otherwise have been. The amount of the economic benefit would be equal to the reimbursement received by the employee.

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